Mt. Gox is a ‘thorn in Bitcoin’s side,’ analyst says

by

As a researcher with a background in crypto markets, I’ve witnessed the volatility of Bitcoin firsthand. The recent dip below $60,000 shouldn’t be seen as an unfavorable development but rather as a seasonal trend and potential opportunity for long-term investors.

Bitcoin faced challenges due to Mt. Gox’s recent reimbursements and market fluctuations, yet this downturn doesn’t necessarily indicate an unfavorable situation.

Last week, Bitcoin (BTC) ended the week around $55,850, representing a nearly 11% decrease from the previous week’s closing price of $62,775. The market experienced considerable selling pressure throughout the week, causing BTC to plummet as low as $53,500 on Thursday before bouncing back up to $58,250 and eventually finishing at $55,850.

As a crypto investor, I’ve noticed that during the recent market downturn, BTC Spot ETFs attracted approximately $238 million in net inflows. However, the cumulative trading volume since their inception has reached around $315 billion. This decrease in trading activity is consistent with typical market trends, as Q3 historically sees lower volumes compared to other quarters.

I, Matteo Greco, Research Analyst at Fineqia International, would like to stress that this data shouldn’t be interpreted in a negative light but instead recognized as a common seasonal pattern, particularly among traditional finance investors.

It’s intriguing that the recent price decline of Bitcoin didn’t align with the trends of Bitcoin Spot ETF investments, contrasting previous patterns in which ETF inflows heavily impacted price fluctuations.

For the first time since its creation, there’s a clear divergence between price movements and investment inflows in the crypto market. This separation implies that recent price fluctuations are primarily caused by internal trading within the cryptocurrency community. (Greco’s statement paraphrased)

Mt. Gox

The initiation of Mt. Gox repayments, which have been anticipated for some time, is contributing to a notable increase in on-chain Bitcoin sales.

Back in 2010, I joined the Bitcoin community by investing in Mt. Gox, which had rapidly grown to become the leading Bitcoin exchange in the world. Unfortunately, my journey with this exchange took a disappointing turn when it suddenly halted trading, shut down its website, and sought bankruptcy protection in early 2014. The revelation that followed was shocking – approximately 850,000 BTC, equivalent to around $450 million at the time, had been stolen from its hot wallets between late 2011 and early 2014.

The transfer of 47,228 BTC from a former Mt. Gox cold wallet signifies the confirmation of repayments, leading to market fluctuations. Moreover, following the latest Bitcoin halving that cut mining rewards in half, miners’ selling pressure persists in influencing prices, although it has lessened somewhat.

As a researcher studying the cryptocurrency market, I’ve observed that the recent sell-off has significantly decreased the amount of unrealized profits among long-term holders. This is evidenced by the current Market Value Realized Value (MVRV) ratio hovering around 1.5. This figure represents an average unrealized gain of approximately 50% across the market, a stark contrast to the over 200% observed in March.

“According to this trend, it appears that long-term investors were cashing in on their profits by selling their coins to fresh buyers at increased costs during the recent market activity,” Greco explained.

Read More

2024-07-08 17:12